The Karnataka High Court has ruled that disputes related to the recovery of money arising from a Share Purchase Agreement do not fall within the jurisdiction of the Commercial Court.

The Court allowed a petition challenging the Commercial Court’s decision to retain a money recovery suit linked to such an agreement.

The Single Bench of Justice H.T. Narendra Prasad held so while hearing a petition against an order of the Commercial Court, which had rejected his application under Order VII Rule 10 of the Civil Procedure Code (CPC) seeking the return of the suit filed by the Respondent.

"The agreement dated 09.10.2020 is only a Share Purchase Agreement, and it is not a Shareholder Agreement. Therefore, the suit is not maintainable before the Commercial Court...In view of the above discussions, the suit filed by the respondent/plaintiff before the Commercial Court is not maintainable. The trial court has erred in dismissing the application filed by the petitioner/defendant under Order VII Rule 10 of CPC," the Single Bench observed.

Senior Advocate Reuben Jacob appeared for the Petitioner, and Advocate Annaiah C. V. appeared for the Respondent.

Case Background and Arguments

The petitioner had entered into a Share Purchase Agreement dated October 9, 2020, with the respondent for the sale of his shares. The respondent later filed a money recovery suit related to the agreement before the Commercial Court.

The petitioner contended that only disputes related to a Shareholder Agreement qualify as a "commercial dispute" under Section 2(1)(c)(xii) of the Commercial Courts Act, 2015, and that a Share Purchase Agreement does not fall within its purview. Therefore, he argued that the case should be transferred to the appropriate civil court.

Court’s Findings and Decision

The Court noted that the dispute stemmed from a Share Purchase Agreement rather than a Shareholder Agreement. Referring to Section 2(1)(c) of the Commercial Courts Act, the court held that the Commercial Court lacked jurisdiction over the case. It further found that the Trial Court erred in dismissing the petitioner’s application under Order VII Rule 10 CPC.

Allowing the petition, the Court directed that the case be transferred to the Principal City Civil and Sessions Judge, Bengaluru, for reallocation to a regular Civil Court as per the law. "Since the matter comes within the jurisdiction of the Principal City Civil and Sessions Judge, Bengaluru, the matter is remitted back to the Court of Principal City Civil and Sessions Judge, Bengaluru to re-allot the case to any other regular court, in accordance with law," the Court said.

Cause Title: Bhaskar Naidu v. Aravind Yadav [Neutral Citation No. 2025: KHC: 3634]

Appearance:-

Petitioner: Senior Advocate Reuben Jacob, Advocate Sourabh R K

Respondent: Advocate Annaiah C V

Click here to read/download the Order


Justice HT Narendra Prasad

Sukriti Mishra

Legal Correspondent

Sukriti Mishra is a Legal Correspondent at Verdictum. She extensively covers the Supreme Court. She has completed her graduation with BA. LL.B (Hons.) from The ICFAI University, Dehradun. Sukriti started covering courts in March 2022, she has previously worked with another legal news portal, where she extensively covered the Delhi High Court and Trial Courts.